Fears of exodus from buy-to-let are exaggerated

Concerns that tax and regulatory changes would spark an exodus from the buy-to-let market may be premature, according to new research from Foundation Home Loans.

A year after the introduction of tougher lending rules for portfolio landlords with four or more mortgaged buy-to-let properties, many investors continue to invest in the buy-to-let sector.

Some commentators had anticipated a mass exodus of buy-to-let landlords, but this seems to have been an exaggerated view of the market, claims Jeff Knight, marketing director for Foundation Home Loans.

He said: “A year on from when the Prudential Regulation Authority’s (PRA) rules were introduced, it’s fair to say it hasn’t caused the mass exodus of landlords that some commentators widely expected.

“Naturally, there were concerns among landlords in the run up to the latest PRA rules, and landlords even said they thought it would be harder to obtain finance in the new regime. However, as with many things, it is often the fear of change than the actual change itself which is the issue.”

Recent research by the firm found that one in five - 19 per cent - portfolio landlords intend to remain in the buy-to-let market indefinitely and on average, portfolio landlords expect to remain in the market for 15 years, compared to ten years for their non-portfolio counterparts.

It echoes research from Simple Landlords Insurance, which found the bigger the landlord the more positive the outlook, with five times as many multi-property landlords vs single property landlords in acquisition mode –not in spite of the challenges in the sector but because of them.

Richard Truman, Head of Operations at Simple, said: “The bigger, more professional landlords are seeing opportunities rather than threats, and are building tax and regulatory changes into their business models and 2-5 year strategies.”

Simple Landlords Insurance is a business name of Millennium Insurance Brokers Limited. Millennium Insurance Brokers Limited are authorised and regulated by the Financial Conduct Authority. Our FCA registered number is 308310
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